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Iowa One-Step Closer to Legalizing Online Poker

Posted on March 5th, 2011

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Not more than two weeks ago, a bill was proposed at the Iowa State Senate to legalize online poker, this despite opposition from several lawmakers from both the Democratic and Republican fronts. The bill’s primary thrust was in availing of the stipulations in current federal law that allows states to legalize and regulate online gambling as long as it is limited within the state’s borders. The opposition continues to exist but during the Senate deliberations, there was little discussion to hold the bill back leading to the Senate voting 9-6 in favor of the proposal and advancing it further towards becoming a law.

“I think that’s a road that I really don’t think is appropriate to go down,” Sen. Jerry Behn, R-Boone, said with a hint of resignation. If current events are to be taken as basis, the bill could be approved very soon and will be immediately readied for implementation. The bill also seeks to put an end to the long-running dispute between hoarse breeders and race operators as to how race revenues are split. A third goal is to let casinos off the hook on referendum votes giving them more control over their fate; the bill will eliminate the every-eight-years referendum on casinos. The biggest driver for the bill’s fast advancement in the legislation pipeline is revenue-driven. Iowa is desperately looking for measures that can augment state earnings and amendments to current gambling rules are expected to sustain state coffers to support vital public projects. A second and complementary motivation is the fact that while internet gambling is illegal, unregulated, and therefore untaxed in the United States, it is already happening overseas and the state is losing income to illegal operators who exploit the borderless nature of the World Wide Web.

Current estimates say 150,000 Iowans are already on the web playing illegal online poker. If all this were to do their transactions in a state-regulated system, additional revenues of up to $30-35 million per year should have been expected to flow into the state coffers. As it currently stands, Iowans are forced to do their gambling elsewhere because of the absence of a legal framework that allows them to gamble in-state. Another key hurdle is the federal law that currently limits online gambling within the state’s borders. As of now, no state allows online gambling although this is expected to change quickly in the next few days – a bill approved by New Jersey legislature is waiting for the governor’s signature and California and Florida are also on the verge of hammering their own laws regulating online gambling.

Another reason for the speedy review of the current bill is the availability of new measures to regulate online casinos. Previous versions were shot down because of their inability to respond to control queries that were raised in-session. The current bill proposes to have gamblers register a personal account either personally in a state-regulated casino, or via online means or through the telephone. Gambling money will then be put into special accounts that will be strictly within the casinos’ control, complete with a password to protect and limit access. The Iowa Racing and Gaming Association will monitor and police the conduct of the games while an independent vendor will be chosen to run the whole operation. “States are in a race to set up a legal online gambling structure within their borders to lock in the tax receipts. If we don’t make a move now, the federal government is going to make a move in the next few years, and we’ll lose the revenue to the federal government. I think it’s forward-thinking.” Rick Bertrand, R-Sioux City said

Sen. Steve Sodders, D-State Center, voted no because he doesn’t fully trust the system to eliminate potential abuses and limit rampant gambling which can lead to more cases of gambling addiction. “Once I have that code, hell, I can go anywhere. I could move to Illinois and gamble and they would never know,” he said. Other talking points in the bill are also drawing attention, although not as much as the online poker legalization. Says Se, Behn, “The deal with the horsemen about racing issues at Prairie Meadows is laudable, but [I] oppose letting casinos off the hook for periodic referendums.”

The bill is expected to go through a full Senate vote and should it be approved, will be passed on to the Iowa House for concurrent review and approval.